The 2022 Finance Act: Reorganization of tax appeal procedures

The 2022 Finance Act aims to reorganize the tax appeal procedure. Indeed, this reorganization follows a long process of reform. The important steps of this reform were :

The 2022 Finance Act is one of the last stones in the building. Indeed, it has made changes to improve the guarantees for taxpayers and to enhance the missions of the appeal commissions.

How do these changes fit into the overall landscape?

1.  Basic principles : The administration’s right of control

Article 210 of the General Tax Code grants the tax administration a right of control. Indeed, this article sets a certain number of principles:

The principle of control

The article states that: the tax administration controls returns, and acts used for the establishment of taxes and duties.

The principle of substantiation of statements

This principle balances the principle of declarative taxation. Indeed, the taxpayers must submit the declaration of their tax bases in accordance with the legal provisions. As a result, during an audit, under Article 210 of the CGI, they “are required to provide all necessary evidence and present all accounting documents to the sworn agents of the tax authorities who have at least the rank of deputy inspector and who are commissioned to perform the tax audit.

The principle of justification by the Administration of its counts of assessment

Thus, in article 220 of the CGI, if the Administration proceeds to the rectification of the declared tax bases, it must inform the taxpayer of:

  • the reasons for, the nature of and the detailed amount of the proposed corporate income tax, income tax or value added tax adjustments;
  • the new base to be used as a basis for the liquidation of the registration duties as well as the amount of the additional duties resulting from this base.

This measure gives the taxpayer the right to defend himself through the remedies provided by law.

2.  What remedies does the taxpayer have against the Administration’s assessments?

The general tax code, in order to guarantee the fairness of the audit procedure, gives taxpayers several means of recourse against assessments they consider unjustified.

Notifications and response letters

These remedies are:

  • The first letter of response: the tax inspector must invite, in its first letter of notification, the taxpayer to produce their observations on the notification of the counts of assessment within thirty (30) days following the date of receipt of the notification letter;
  • The second letter of response: when the Administration maintains its counts of assessment after receiving the taxpayer’s observations, it must notify the taxpayer within 60 days after receiving the first letter of response. In this notification, it must mention that its position becomes final if the taxpayer does not appeal to the local tax commission or the national tax appeal commission.

Local Tax Commission, National Tax Appeal Commission

Local Tax Commissions (LTC)

Local tax commissions are governed by Article 225 of the General Tax Code.

Each commission includes:

  • a presiding magistrate;
  •  a representative of the governor of the prefecture or province in whose authority the commission’s headquarters are located;
  • the head of the local tax department or his or her representative, who acts as recording secretary;
  • a representative of the taxpayers belonging to the professional branch most representative of the activity conducted by the requesting taxpayer.

Their role is to rule on litigations submitted to them following the above-mentioned procedure. According to the law, they must declare themselves not qualified when it comes to the interpretation of legal and regulatory provisions.

These commissions have authority in the following cases:

  • rectifications concerning professional income determined according to the system of the single professional contribution, income and profits from real estate, income and profits from movable capital and registration and stamp duties;
  • verification of the accounting of taxpayers whose turnover recorded in the income statement, for each financial year of the period not prescribed, is less than ten (10) million dirhams.

National Tax Appeal Commission (NTAC)

Established by Article 226 of the General Tax Code, it is a permanent commission that sits in Rabat and is responsible for ruling on tax appeals concerning:

  • to the examination of the whole tax situation of the taxpayers provided for in article 216 above, whatever the declared turnover;
  • Audits of taxpayers’ accounting when the turnover declared in the income statement, for one of the years audited, is equal to or greater than ten (10) million dirhams;
  • rectifications of tax bases for which the administration invokes abuse of rights.
  • appeals for which the local tax commissions have not taken a decision within a period of twelve (12) months.

This commission is composed of:

  • seven (7) magistrates,
  • thirty (30) public officials.
  • one hundred (100) people from the business community

3.  What are the contributions of the 2022 Finance Act?

Creation of Regional Tax Appeal Commissions (RTAC) and reorganization of local tax commissions (LTC)

The 2022 Finance Act provides for the establishment of a new commission called the “Regional Tax Appeals Commission” (RTAC) to which the following appeals will be addressed:

  • those relating to the verification of the accounts of taxpayers whose declared turnover is less than ten (10) million dirhams,
  • those relating to rectifications of income and profits from movable capital

The composition of the RTAC will be as follows:

  • a presiding magistrate
  • two representatives of the administration
  • and two taxpayer representatives.

Therefore, the authority of the existing local tax commissions (“LTCs”) will be limited to rectifications in the area of:

  • professional income determined according to the single professional contribution system
  • property income and profits
  • registration and stamp duties

To enhance the effectiveness of LTC, the 2022 Finance Act provides:

  • the taxpayers’ representative can also be chosen among notaries and/or adouls,
  • to entrust the secretarial duties of the LCTs to a representative of the tax authorities, without reference to the “head of the local tax department”,
  • to extend the term of office of the departing taxpayer representatives until the appointment of new representatives
  • a provision relating to incompatibility, to avoid that, persons having knowledge of a dossier through their activities and/or functions, take part in the work of the commissions.


Reorganization of the composition of the National Tax Appeal Commission (“NTAC”)

To enhance the effectiveness of the NTAC, the following measures are proposed:

  • specify that taxpayer representatives may be selected amongst public accountants and/or chartered accountants,
  • to set at three (3) years, renewable only once, the duration during which the members representing the administration sit on the Commission,
  • automatically extend the term of office of departing taxpayer representatives until new representatives are appointed,
  • broaden the scope of incompatibility to cover all members of the commission who have already had to deal with the dispute.

Taken together, these measures should reduce the workload of the current boards, provide new safeguards for taxpayers, and improve the overall efficiency of the appeal process.

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